Articles Posted in Bankruptcy

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The district court granted a request for entry of a charging order against a personal guarantor and judgment debtor’s transferable interest in an LLC. The judgment debtor and intervenor filed a motion to quash alleging that multiple levies and garnishments were improper. The district court granted the motion to quash. The Supreme Court affirmed in part and reversed in part, holding (1) the entry of the charging order was proper; but (2) the district court erred in granting the motion to quash because it is proper to have multiple levies and garnishments at the same time so long as they are under a single execution. Remanded. View "DuTrac Community Credit Union v. Hefel" on Justia Law

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A federal district court certified two questions of law to the Iowa Supreme Court in a priority dispute between competing creditors of a bankrupt hog operation. Crooked Creek Corporation operated a farrow-to-finish hog facility where it bred gilts and sows and raised their litters for slaughter. After the company filed for bankruptcy, the hogs were sold, but the sale did not generate enough money to pay off competing liens asserted by two of Crooked Creek’s creditors: Oyens Feed & Supply, Inc. and Primebank. Oyens Feed held an agricultural supply dealer lien because it sold Crooked Creek feed “on credit . . . to fatten the hogs to market weight.” Primebank had a perfected article 9 security interest in the hogs to secure two promissory notes predating Oyens Feed’s section 570A.5(3) agricultural supply dealer lien in the hogs. At trial, Oyens Feed claimed it was entitled to all of the escrowed funds because its agricultural supply dealer lien had superpriority over Primebank’s earlier perfected security interest. The bankruptcy court concluded the plain meaning of section 570A.4 created a “discrete window of time,” beginning with the farmer’s purchase of feed and ending thirty-one days later, within which an agricultural supply dealer must file a financing statement to perfect its lien. The bankruptcy court concluded Oyens Feed had only perfected its lien as to amounts for feed delivered in the thirty-one days preceding the filing of each of its financing statements. In reaching its decision on the extent of Oyens Feed’s lien in the escrowed funds, the bankruptcy court reasoned the acquisition price of the hogs was zero because Crooked Creek raised hogs from birth rather than purchasing them. The court concluded “the ‘purchase price’ comprises the vast majority, if not all of, the ‘acquisition price’ for . . . purposes of Iowa Code § 570A.5(3).” The United States District Court for the Northern District of Iowa asked the Iowa Supreme Court: (1) whether, pursuant to Iowa Code section 570A.4(2), was an agricultural supply dealer required to file a new financing statement every thirty-one (31) days in order to maintain perfection of its agricultural supply dealer’s lien as to feed supplied within the preceding thirty-one (31) day period?; and (2) whether pursuant to Iowa Code section 570A.5(3), was the “acquisition price” zero when the livestock are born in the farmer’s facility? The Supreme Court answered both certified questions in the affirmative. View "Oyens Feed & Supply, Inc. v. Primebank" on Justia Law

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A hog producer with outstanding loans to Primebank went deeper into debt by purchasing feed on credit from Oyens Feed & Supply to fatten the hogs to market weight. The hog producer subsequently filed for bankruptcy. Primebank had a perfected security interest in the hogs to secure two promissory notes predating Oyen Feed's perfected agricultural supply dealer lien on the hogs. The hog producer filed an adversary proceeding to determine the priority of the liens. The bankruptcy court granted Primebank partial summary judgment on grounds that Oyens Feed failed to provide Primebank a certified request under Iowa Code 570A.2. Oyens Feed appealed the bankruptcy court's ruling to the U.S. district court, which then certified a question of law to the Supreme Court. The Court answered by holding that Primebank's prior perfected security interest in the hogs is trumped by Oyen Feed's agricultural supply dealer lien under Iowa Code 570A.5(3) to the extent of the enhanced value of the livestock presumptively attributable to the feed, even though the bank received no certified request before the feed was sold on credit. View "Oyens Feed & Supply, Inc. v. Primebank" on Justia Law